Note from the Editor

I did it! My ebook, One Arm Recipes, is out at last.

To make things even better, as I waited for approval from Clickbank I got my Build a Niche Store sites updated to the latest version, so they work with the new eBay Partner Network. I’m feeling pretty good about my current accomplishments.

8 Ways to Guarantee Your Home Business Fails

Lots of people fail in their home businesses. Failure is easier than success, after all, even though it hurts more. There are plenty of things you can do that will easily increase your odds of failure.

1. Talk, but don’t act.

Go ahead. Tell everyone that you’re going to start a home business. Maybe even buy a business kit or ebook that tells you all about what you need to do in order to get started. But actually start? No.

2. Work as little as possible on your business.

Lots of people get started, but then do very, very little work on their business. There’s always something else going on, whether it’s family life, a regular job or a hobby.

Know what? An hour a week isn’t going to get you very far in business. If you want to get to the point where your business practically runs itself, you’re going to have to work hard to reach that point. It takes time, often years, to have so much as a shot at putting your business on anything resembling autopilot.

3. Opportunity-hop.

Now, there are times when you should give up on a business opportunity. Some ideas genuinely aren’t going to work out. The challenge comes in figuring out when to switch and when to stick with it.

This problem is particularly strong in direct sales. People go from company to company because so many sound so good. But you aren’t impressing your customers and you aren’t building a solid foundation for your business. You lose a lot every time you decide to start over. Don’t do it casually.

4. Start too many businesses.

This is a common fault for people running online businesses. One website may seem to be easy to run, so why not two or three or fifty? Surely 50 websites earning $10/day is better than one earning $10/day.

Too bad it’s just not that simple. Each website requires development, marketing and maintenance. Even if they’re on something near to autopilot, all your websites need some of your attention.

5. Fail to research.

Even if your best friend ever swears that it’s a brilliant opportunity, you need to do your research. First and foremost is whether or not it’s something you will be comfortable doing. If you don’t enjoy your home business, where’s the motivation to work on it. The possibility that you may earn good money later is often not enough.

And then there’s the question of whether or not anyone else will care about what your business offers. If no one is interested, no one will buy.

Worse yet, a failure to research can mean falling for a scam. You always need to know what you’re getting into.

6. Assume you can do it all without help.

Everything. Take care of your family, home and your home business.

Most likely you will need some help. The kids out of the house for at least part of your working time is a good start. You can work after they’re asleep too, but you’re risking having too little time for yourself if you try to do everything. Overwork is the path to burnout.

7. Refuse to market your business.

There are plenty of ways to market a home business, but especially if you’re online it’s very easy to fall for “build it and they will come,” which quite simply doesn’t work.

You should be willing to talk to people you meet about your business. Market it online in whatever form you prefer. Market it in the real world.

8. Have unrealistic expectations.

This can be one of the causes for most of the above problems. If you expect your business to succeed too quickly, you may be more prone to opportunity hopping. If you expect to be earning money quickly, you may overextend your business.

There’s only so much you should expect of a given home business. There are many wonderful possibilities that could happen, but overnight, 6 figure success is extremely low on that list. Assume you will have to work hard, for years, and that it will be a while before you see so much as adequate money.

But don’t forget to dream!

Note from the Editor

I’ve continued to make good progress on my starting a home business series. It’s a lot of work to write out, but a lot of fun too. I even have plans to chronicle my next big step in business – releasing my first ebook for sale! Not on an Internet Marketing topic, either. I’m looking forward to it.

How Important is a Good Niche?

Niche marketing is a big topic in home business. A good niche helps to define your target market and focuses your efforts overall.

Yet many people don’t worry that much about having a niche. They just want to get sales moving, to anyone who will stop by their website.

Only trouble is, it rarely works. Much of the time this hurried approach is the fast way to failure, rather than to profits. It’s too hard to sell to a vague audience in most areas.

Sometimes the product defines the niche well enough, but other times your smartest move is to narrow things down further yet. If you sell beauty products, for example, you may choose to focus your efforts on getting the most from the products you sell, despite a busy lifestyle. Having this kind of a target helps to give inspiration as you create content for your website.

And that’s one of the keys. Being focused means you have something definite to work on. You aren’t writing random item descriptions or articles, hoping to appeal to someone. You have a definite client in mind. It helps.

Failing to consider an appropriate niche is a mistake I’ve made plenty of times myself. I’m much better now at spotting that failure, so that I lose less time on unfocused efforts. I can see that my more niche-focused sites excel more quickly than the more general ones. I can make a general one succeed on its particular topic, but it’s a lot more effort.

I’ll echo what many people have said about finding niches. Wordtracker is a great resource. You can find out what kinds of things people are searching for in a given area, and gain some ideas for what you want to do. They have a free trial, but the paid version can be quite worthwhile, especially if you want to get serious about pay per click marketing.

But there are a lot more resources. Look at popular products on Amazon, eBay and other websites. Use a generic term for what you’re planning on selling, then see what kinds of sites there are. Some will be focused on a niche, and while I won’t say go for the exact niche, you can gain some inspiration as to the kinds of consumers you can target.

Combining some research into a niche with your own interests can product delightful results. While not an absolute guarantee of success, it’s a better place to start than many others.

Note from the Editor

This will be the last edition for the year. I anticipate returning to this newsletter around January 9, 2008. That’s about three weeks. I know I won’t be wanting to do one the day after Christmas, and I won’t promise to be back on a regular schedule by January 2. Might be, but I won’t promise it.

Much of the break will simply be due to being tired from all the family events this time of year. It’s a good time for me to take a break and just enjoy the fact that I can take a break.

Year End Tax Tips for Home Businesses

Someone recently asked me what they could do now to make tax time easier for this upcoming tax season.

The best thing you can do is to think about taxes before then year ends. Most people wait until the tax filing deadline before they ask how they can reduce their income taxes. Unfortunately, once 2007 ends, there’s very little you can do to minimize your taxes for 2007.

To start your tax planning, you should review your income, deductions and withholdings before the year ends. Which means you need to get your bookkeeping caught up! You should use a software program, such as QuickBooks, Quicken Home and Business, or spreadsheets to keep track of your income and expenses for your business.

Once your bookkeeping is caught up… do you expect your home business to have a profit or a loss this year?

If you have a profit, here are some tax planning tips to help minimize your home business taxes this year:

1. Defer your income. If you have a home based business and it looks like you’ll have a good profit this year, consider invoicing your clients in January instead of December, to defer the income to next year. Or, just wait until the end of December to send invoices. Any money you receive in January will go on your 2008 tax return, not 2007.

2. Accelerate expenses. Do you need to purchase any inventory? What about supplies? Does your computer need to be replaced? If you’ve got a profit for 2007, consider purchasing inventory, supplies or other items that will need to be replaced soon this year to reduce your taxable profit.

In addition, if you itemize your tax deductions, make sure you pay all mortgage payments, property tax, medical expenses, etc. this year, even if they aren’t due til next year, to help increase your tax deductions for this year.

3. Contribute the maximum amount to retirement plans. As a home based business owner, you have several retirement plans to choose from. You can setup a traditional IRA, a SEP IRA, a Simple IRA, or even a 401K. The maximum contribution amounts vary based on the retirement plan, but these plans allow contributions from $4,000 up to $44,000 per year. Contributing to a retirement plan is a great way to maximize your retirement savings and to minimize your taxes at the same time.

4. Give to charity. Although charitable donations don’t reduce your business income, they do reduce your taxable income if you itemize your deductions. Gifts of cash or goods are a great way to help reduce your tax bill this year.

On the flip side, if you expect a larger profit next year, or if you expect to jump into a higher tax bracket next year, it’s best to report as much income this year, and to defer as many expenses as possible til next year.

Either way, year end tax planning can really help minimize your taxes. But you have to make it a point to review your taxes before the year ends. Once 2007 is gone, so are your tax planning opportunities for 2007.

Kristine A. McKinley, CPA, and CFP®, offers financial and tax planning on an hourly, fee-only basis. She specializes in helping home based and online business owners understand and minimize their income taxes.

For more tax tips for home based and online businesses, please visit http://www.onlinebiztaxtips.com